unable to use average cost method

My subsequent comments are based on Q2006 Premier. That is the only thing I can think of that could account for our different observations.

I think this expectation is not correct; it certainly isn't necessary.

I can't see where it is material which shares are sold, but Quicken carries shares by lot, so it has to take them from some lot(s).

Any lot whose actual cost is the same as the average cost will appear as being sold at original cost.

I setup two mutual funds; one using average cost, the other not. I entered 4 buys for each security, buy dates duplicated for each security, each of the four buys at a different price/share, but duplicated for each security. I then sold about 3/4 of the total shares, in a single sell, with the number of shares requiring complete liquidation of the first three lots, and part of the fourth lot of each security.

Quicken used the average cost for all shares in each sold lot for the average-cost security; and it used the actual cost for each lot of the non-average-cost security.

After checking the Capital Gains report for the above transactions, I edited the non-average cost security, and changed it to average cost. Upon returning to the Capital Gains report, its gains were computed exactly as the fund that began as an average cost fund.

Quicken looks right to me. I would recompute your average cost/share.

I definitely do not think this is true. For one thing, if they planned to prevent you from changing to/from average cost after some event, they could just make the "Average Cost" box inaccessible after that event. More importantly, see above.

John, Thanks for looking into this. I did the same kind of tests you did and they seemed to work fine, as you found. So my problem must be something related to this particular security and/or the upgrade from Q03. An issue affecting this could be the fact that I have set up and used my own security types, e.g. large cap value, etc. as a way to easily create investment reports. It used to be that the average cost check box was always on the edit security box dialog. Now anything other than the "mutual fund" security type makes that option invisible. If you try to go from average cost back to lots you get a warning that includes this: " For existing sales of this security Quicken will assume you specified the oldest shares." That's effectively what I'm seeing. So, I now believe that maybe the upgrade process did not like my using average cost on a security type other than mutual fund (as evidenced by the fact that they now hide it for all but the type: mutual fund). Therefore the conversion process automatically applied a switch back to lots which became permanent for any security in which sales had taken place. Guess I will just have to live with it.

Bob L.